Correlation Between AG Mortgage and Newtek Business
Can any of the company-specific risk be diversified away by investing in both AG Mortgage and Newtek Business at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AG Mortgage and Newtek Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AG Mortgage Investment and Newtek Business Services, you can compare the effects of market volatilities on AG Mortgage and Newtek Business and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AG Mortgage with a short position of Newtek Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of AG Mortgage and Newtek Business.
Diversification Opportunities for AG Mortgage and Newtek Business
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MITT-PC and Newtek is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding AG Mortgage Investment and Newtek Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtek Business Services and AG Mortgage is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AG Mortgage Investment are associated (or correlated) with Newtek Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtek Business Services has no effect on the direction of AG Mortgage i.e., AG Mortgage and Newtek Business go up and down completely randomly.
Pair Corralation between AG Mortgage and Newtek Business
Assuming the 90 days trading horizon AG Mortgage Investment is expected to generate 0.7 times more return on investment than Newtek Business. However, AG Mortgage Investment is 1.43 times less risky than Newtek Business. It trades about 0.25 of its potential returns per unit of risk. Newtek Business Services is currently generating about 0.18 per unit of risk. If you would invest 2,514 in AG Mortgage Investment on August 30, 2024 and sell it today you would earn a total of 30.00 from holding AG Mortgage Investment or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AG Mortgage Investment vs. Newtek Business Services
Performance |
| Timeline |
| AG Mortgage Investment |
| Newtek Business Services |
AG Mortgage and Newtek Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AG Mortgage and Newtek Business
The main advantage of trading using opposite AG Mortgage and Newtek Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AG Mortgage position performs unexpectedly, Newtek Business can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Newtek Business will offset losses from the drop in Newtek Business' long position.| AG Mortgage vs. AG Mortgage Investment | AG Mortgage vs. AG Mortgage Investment | AG Mortgage vs. Invesco Mortgage Capital | AG Mortgage vs. Invesco Mortgage Capital |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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